UK house price growth picks up pace, says Halifax
02-06-2015
John Aglionby
LONDON - JULY 28: Property For Sale signs are pictured on July 28, 2008 in London, England. House prices continue to fall as the economy experiences a period of stagnation. (Photo by Daniel Berehulak/Getty Images)
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UK house prices rose at their fastest pace for six months in the quarter to January and recorded their biggest increase in that month since 2009, according to data from the Halifax.
Demand should be supported by the expanding economy and low mortgage rates but the annual rate of increase is expected to slow to between 3 per cent and 5 per cent from 8 per cent last year, the bank said.
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Housing data are closely watched by the Bank of England’s Monetary Policy Committee as it considers whether to raise interest rates. In its latest monthly announcement, at midday, it left rates unchanged at 0.5 per cent.
Prices rose 1.9 per cent on a seasonally adjusted basis in the three months to January and 2 per cent in the first month of the year. The annual change to January was 8.5 per cent, up from 7.8 per cent in the 12 months to December but well below the peak of 10.2 per cent recorded in July 2014. The average price was £193,130.
Martin Ellis, Halifax housing economist, said: “[The] bounceback in house price growth in January coincides with reports of the first rise in mortgage approvals for six months in December.
“These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market.”
He warned, however, that it was “too early to draw any firm conclusions” because January figures are often volatile due to sales low volumes.
Mr Ellis forecast that “housing demand should continue to be supported by an expanding economy, continuing low mortgage rates and a boost to households’ spending power resulting from lower consumer price inflation and reduced fuel bills”.
Price indices have presented wildly contrasting pictures of the health of the housing market — according to some the boom is back, while to others the slump staggers on
“Nonetheless, we expect the overall downward trend in house price growth seen since last summer to continue over the coming months.”
Howard Archer, chief UK economist at IHS Global Insight, described the January figure as an “outlier”, adding: “Nevertheless we do suspect that the weakness in housing market activity may be bottoming out and we see activity picking up to a limited extent in 2015.
“The upside for housing market activity is expected to be constrained by more stretched house prices-to-earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the knowledge that interest rates will eventually start rising, albeit gradually.”
Mortgage approvals rose 2 per cent between November and December, to 60,275 having fallen for five successive months, according to Bank of England data. Meanwhile, figures from the Royal Institution of Chartered Surveyors suggested housing supply remained tight, with agreed sales broadly stable in December after four months of declines.
The Halifax did not give any regional breakdowns for house price changes. It normally discloses those on a quarterly basis with the next announcement due in March.